The National Bank of Egypt (NBE) — as the first major arranger and financing agent — led a banking alliance to provide long-term syndicated financing totaling EGP 12.5bn for the Canal Sugar Company.
The African Export-Import Bank (Afrixim), QNB NBE (guarantee agent), Banque du Caire, Suez Canal Bank, the United Bank, the Arab Investment Bank (AIB), the Agricultural Bank of Egypt (ABE), the Housing and Development Bank (HDB), and the Industrial Development Bank (IDB) also participated in the financing.
The loan is directed to finance part of the investment cost of a project to reclaim and develop an area of 181,000 feddans in western Minya within the framework of the presidential programme to reclaim 1.5m feddans, of which about 600,000 feddans are located in the western Minya region, in addition to establishing and operating a sugar production plant with a production capacity of about 900,000 tonnes of sugar annually.
The announcement of the closure of the funding came after the completion of the financing package and the fulfilment of all financing contracts, documents, and preconditions for withdrawal.
Chairperson of the NBE Hisham Okasha stressed that the joint financing reflects the ability of the Egyptian economy to attract direct investments, especially in light of the fact that financing contributes to supporting the agricultural and industrial sectors.
He explained that this project is the largest agricultural and industrial project aiming to replace imports and settle the local industry. It also actively contributes to developing Upper Egypt by creating 1,300 direct and indirect jobs in Minya, in addition to contracts with a large number of farmers in the lands surrounding the project to supply the beet needed to operate the factory at its maximum capacity.
Okasha pointed out that such projects are of high added value and have a positive impact on the balance of payments by reducing the value of imports and increasing exports to maximise returns and provide various agricultural crops such as wheat, corn, and sugar beets, which contribute to covering part of any gap in any food items needed by the Egyptian market.
This contributes to achieving self-sufficiency in food needs, thus reducing pressure on the state’s stores of foreign currency, which is reflected positively on the strength of the national economy.
He added that this project supports the directives and plans of the state — including developing the agricultural sector — by striving to increase agricultural areas and use modern farming methods and advanced global irrigation systems that depend mainly on groundwater.
It also works to rationalise water consumption, which is an absolute necessity in light of water scarcity globally, in addition to supporting and encouraging Egyptian factories in general and the food industry sector in particular to expand locally and regionally.
Furthermore, Okasha said that the company managed to attract foreign investments and financing worth EGP 7.516bn for the project. He explained that the company’s investment in this project comes within the framework of implementing its strategy, as it seeks to invest in vital fields and sectors.
For his part, Jamal Al-Ghurair — Head of Al-Ghurair Foodstuff Investment Group — said that the experimental operation stages of the factory have started. The results of the experimental tests indicate the efficiency of the operational capacity based on the effort exerted by Egyptian labour in all disciplines, and this came with the beginning of the sugar beet supply season. He noted that the plant aims to reach a capacity of 18,000 tonnes per day in 2022.
For his part, Yehia Aboul-Fotouh — Vice Chairperson of the NBE — said that this project is a successful model for the investment and economic partnership between Egypt and the UAE. It also encourages Emirati investments, as the Emirati side contributes 70% of the capital — represented by Al-Ghurair Group by 37%, the Morban Energy Investment Fund by 33%, and Emirati shareholders that have pumped $220m, which represents their entire stake in the project — while Al-Ahly Capital is contributing 30% of the capital, as the company has injected its entire stake in the project.
He added that the joint loan includes a package of non-traditional financing solutions in line with the special nature of agricultural projects and agricultural industrialisation, represented in diversifying sources of financing, which contribute to providing the external resources necessary to establish this type of major projects through foreign financing sources.
The HSBC also played the role of the sole structuring and document bank, the main arranger and lender for the €135m financing, as well as a group of German banks with the guarantee of the German export credit agency Hermes for NBE and Afrixim, which contributed a share of €100m, financing an external on-lending system for the first time in the Egyptian banking market with the aim of re-lending to the company to finance part of the investment cost of the project, in addition to $50m from the Saudi Fund for Development along with financing from local banks worth EGP 8.5bn, including a category EGP 5bn within the framework of the CBE’s initiative.
Sherif Riad — the CEO of corporate credit and syndicated loans at NBE — said that the bank had previously arranged several transit financings with the participation of eight banks, which provided financing for about 50% of the project’s needs with the aim of accelerating the implementation of its steps.
This helped implement a partial reclamation of 90,000 feddans of the project’s land with the deep ripping system. About 18,000 feddans were cultivated with beet crop out of a total of 100,000 cultivable feddans. This is in addition to 191 km of irrigation pipes that were extended out of a total of 460 km, and 187 axial pieces of irrigation equipment were installed out of a total of 458.
More than 90% of the construction of the factory has been completed. The factory includes the largest silo in the world, with a storage capacity of 417,000 tonnes.
Riad added that this financing is the culmination of the efforts and fruitful cooperation between the participating banks, foreign financing institutions, foreign technical advisers, and legal advisory offices.
Karim Saadeh, the CEO and Managing Director of Al-Ahly Capital Holding — the investment arm of NBE — and the project’s financial adviser, said that Al-Ahly Capital Holding made a direct contribution to the project with EGP 1.62bn.
He explained that this investment came after studying all aspects of the project, which proved its economic feasibility. Moreover, the project relies on a technological structure that keeps pace with rapid development, such as using the latest methods of agriculture and global irrigation systems, which contributes to preserving resources and saving effort and time spent during operations.
Ahmed Al-Sersy — Head of syndicated loans at the NBE — said that this type of joint financing reflects the ability of participating banks and financial institutions to achieve the effective and positive integration necessary to arrange this type of financing of a special nature, which aims to support the state’s strategy in developing economic development.
Hazem Fouad — Head of the financing sector for the Canal Sugar Company — stressed that this alliance will positively affect the most important pillars of the Egyptian economy and contribute effectively to the development of Upper Egypt by providing many job opportunities in Minya.
